Which is the CJEU copyright case to look most forward to? Probably Art & Allposters

Sweet CJEU dreams

If you were asked the typical summertime question/Buzzfeed-style quiz, ie which copyright case currently pending before the Court of Justice of the European Union (CJEU) you are most looking forward to after the summer break, what would you reply?

It is not an easy question as there is a number of interesting references for a preliminary ruling dealing with issues that span from the notion of parody under EU copyright [this is the Deckmyn case, on which see here, here and here; see also here for the recently approved UK exception for parody caricature and pastiche, which will enter into force on 1 October], private copying levies [this is Copydan, on which see here: this case is particularly topical to UK debate on private copying, in that it will require the CJEU to interpret – among other things – the de minimis rule in the last sentence of Recital 35 to the InfoSoc Directive and the exclusion of the fair compensation requirement], linking [C More Entertainment is about linking by means of paywall circumvention, while BestWater concerns embedded links], to (again) jurisdiction in alleged online infringement cases [Pez Ejduk will possibly require the CJEU to re-consider the intention to target approach, rejected in Pinckney, on which see here, here and here], and everything in between, including the resale royalty right [this is Christie's France]. 

There is however a national court that has referred pretty intriguing and challenging questions to the CJEU. It is the Dutch Supreme Court in Case C-419/13 Art & Allposters, which this blog has already mentioned on a number of occasions [here and here]. The news is that the Opinion of copyright-friend Advocate General Cruz Villalon is due in less than a month's time, ie on 11 September.

In this Kat's opinion, this reference has the potential to be more far-reaching than other cases that have been in the spotlight recently, such as Svensson and Meltwater. This not just because its outcome looks more unpredictable [really, how realistic was it for those two cases to end up differently from how they did?], but also because it will require the CJEU to consider:

• The right of adaptation: has it been (implicitly) harmonised at the EU level for subject-matter other than software and databases? Until recently the general opinion was that it has not.
• Exhaustion of the right of distribution as per Article 4(2) of the InfoSoc Directive, which is the EU equivalent of the US first sale doctrine and states that: "The distribution right shall not be exhausted within the Community in respect of the original or copies of the work, except where the first sale or other transfer of ownership in the Community of that object is made by the rightholder or with his consent."
• The relationship between different exclusive rights, related exceptions and limitations, and possibly also moral rights [though these have not been harmonised at the EU level], as well as
• The compatibility of a peculiar Dutch judicial rule adopted in 1979 with the 2001 InfoSoc Directive and the more general pre-empting power of the latter with regard to national copyright laws.

Visual synopsis of the case:
Canvases + exhaustion

Background

As explained much more in detail by EU Law Radar, the background proceedings concern the unauthorised making and selling by Art & Allposters of altered versions of copyright-protected artworks, whose rights are managed by collecting society Pictoright. Art & Allposters used authorised posters of the artworks in question [that presumably it had lawfully purchased] to transfer the images on canvas first, and sell them afterwards. The images were also cut to facilitate the placing on canvas. 

Following an unsuccessful outcome at first instance, Pictoright won before the ’s-Hertogenbosch Court of Appeal. This court relied on the 1979 Poortvliet judgment to exclude that the right of distribution had been exhausted as per Article 12b of the Dutch Copyright Act and Article 4(2) of the InfoSoc Directive. This Kat is not an expert in Dutch copyright law [so any insights from Dutch readers are very welcome], but understands that in that ruling the Dutch Supreme Court had to deal with a very specific case, ie artist Poortvliet wishing to prevent the defendant who had purchased copies of his drawings embodied in calendars (for the realisation of which he had granted a limited licence) to sell them as separate reproductions after cutting them out from the calendars and fixing them on chipboard panels. The Supreme Court sided with Poortvliet and established the principle according to which a physical transformation of a physical copy prevents exhaustion. In other words: a transformation-preventing-exhaustion rule. 

In Art & Allposters the Court of Appeal held that, because of Poortvliet, an altered canvas transfer made from a poster lawfully sold in the European Economic Area is not subject to Article 4(2) of the InfoSoc Directive and its Dutch equivalent.

The litigation eventually reached the Supreme Court, that decided to refer the following questions to the CJEU:

Does Article 4 of the [InfoSoc] Directive govern the answer to the question whether the distribution right of the copyright holder may be exercised with regard to the reproduction of a copyright-protected work which has been sold and delivered within the European Economic Area by or with the consent of the rightholder in the case where that reproduction had subsequently undergone an alteration in respect of its form and is again brought into circulation in that form?

(a)    If the answer to Question 1 is in the affirmative, does the fact that there has been an alteration as referred to in Question 1 have any bearing on the answer to the question whether exhaustion within the terms of Article 4(2) of the Copyright Directive is hindered or interrupted?

(b)    If the answer to Question 2(a) is in the affirmative, what criteria should then be applied in order to determine whether an alteration exists in respect of the form of the reproduction which hinders or interrupts exhaustion within the terms of Article 4(2) of the Copyright Directive?

(c)    Do those criteria leave room for the criterion developed in Netherlands national law to the effect that there is no longer any question of exhaustion on the sole ground that the reseller has given the reproductions a different form and has disseminated them among the public in that form (judgment of the Hoge Raad of 19 January 1979 in Poortvliet, NJ 1979/412)?

Why this case is important

Charles is very adaptable
when it comes to accommodation
(the best might do),
but has the right of adaptation
been harmonised?

1) Can the right of adaptation be considered (implicitly) harmonised at the EU level?

This blog has recently addressed this very issue by referring to the leaked Impact Assessment on EU copyright, in which the EU Commission stated:

"Contrary to the reproduction right and the communication to the public/making available right, there is no express rule with respect to adaptations in the InfoSoc Directive (unlike the Software and in the Database Directive). However, the broad manner in which the reproduction right in Article 2 of that Directive is formulated and the CJEU's jurisprudence on the scope of the reproduction right notably in Infopaq and Eva-Marie Painer seem to cover adaptations which give rise to a further reproduction within the meaning of Article 2. The pending case Allposters will shed further light on the scope of Article 2."

If the Court concludes that adaptation falls within the broad right of reproduction, then – among other things – it may be questionable whether national rules like Poortvliet are still compatible with EU law.

From a different, more policy-oriented perspective, national initiatives like those advanced in Ireland and providing for the adoption of innovation and fair use exceptions would not be admissible under EU law.

Is copyright a democracy?

2) A hierarchy between rights?

The question(s) posed by the Dutch Supreme Court is heavily dependent on the Portvliet rule. Yet, Article 4 is about the right of distribution and its exhaustion. It is not about altered reproductions (adaptations) of a copyright-protected work which has been sold and delivered within the European Economic Area by or with the consent of the rightholder. Should the CJEU decide otherwise, would this imply that there is a hierarchy between economic rights, and also between these and moral rights? While moral rights have not been harmonised at the EU level, Article 6bis of the Berne Convention states that moral rights are independent of the author's economic rights.

3) What about the Poortvliet rule?

The above appears to require a reconsideration of the Poortvliet rule, that would possibly result in scaling down its value as a general principle and instead recognising it for it is, ie a very fact-specific conclusion. 

Overall, the idea of a general transformation-preventing-exhaustion rule does not seem quite right.

As the CJEU recalled in UsedSoft (though a case concerning the Software - not InfoSoc - Directive), "the objective of the principle of the exhaustion of the right of distribution of works protected by copyright is, in order to avoid partitioning of markets, to limit restrictions of the distribution of those works to what is necessary to safeguard the specific subject-matter of the intellectual property concerned".

It's the (internal) market, baby!

References to internal market-building concerns are repeatedly present in the InfoSoc Directive and have been increasingly made by the CJEU in its judgments, also to achieve unexpected outcomes (USedSoft itself is an example). Is it compatible with the realisation of an internal market free from barriers to trade to have a national rule that allows a copyright holder to avoid exhaustion of the right of distribution anytime a work lawfully sold in the territory of the Community is transformed, no matter whether the transformation may be permissible under one of Article 5 exceptions/limitations and does not amount to a violation of the author's (national) moral rights, notably integrity? 

It is also worth recalling that, despite references in the InfoSoc Directive and CJEU case law to the need of providing rightholders with a high level of protection, in FAPL (a case not concerning exhaustion though), the CJEU held that "the specific subject-matter of the intellectual property does not guarantee the right holders concerned the opportunity to demand the highest possible remuneration. Consistently with its specific subject-matter, they are ensured – as recital 10 in the preamble to the [InfoSoc] Directive and recital 5 in the preamble to the Related Rights Directive envisage – only appropriate remuneration for each use of the protected subject-matter."

Overall, if not other arguments, internal market partitioning concerns might have a significant weight in orienting the decision of the CJEU.

Let’s now wait for the AG Opinion next month.